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Baby Boomer Bust
The largest generation is US history - the "baby boom generation" is
about to retire. In 2007 the first baby boomer filed for social
security retirement benefits. From here the numbers are set to
explode.
Of course there are many different opinions on the financial
health of the social security system. Some feel that the system is fine for another
30 or even 40 years. Judging from their obviously overstated and apocalyptic rhetoric the White House feels
the system will be
collapsing any time now.
So what's the truth? The
predictions that the system can chug along just fine for several
more decades are based on economic growth figures and population
growth projections that are often far too rosy.
And given the
serious economic challenges that will surface during the coming
decade, the system probably has 10 or so years before social
security taxes will have to be substantially raised or benefits
significantly reduced, or some combination of the two.
Medicare
Though you read a lot in the media about the social
security crisis - the Medicare system poses a much
larger financial problem.
President Bush has proposed
a new application process for Medicare. Presently you get Medicare
benefits as soon as you turn age 65.
Why would the government want to bother with an application process? Simple - you can't refuse coverage without an application.
He wants Medicare coverage to be a privilege you have to qualify for
- not an automatic right due to nothing more than age. In the future you can expect Medicare to be rationed to only those
who live below the national poverty standard.
The Boomer Real Estate Crisis
Over the next decade many of the baby boomers will attempt to
exchange their larger family homes for smaller retirement homes such as
low-maintenance condos or cluster homes.
This presents yet another problem. The generation behind the boomers
is both smaller and also much, much less affluent.
Few of them will have the assets required to buy these properties -
or any property for that matter.
What will happen to the national real estate market when all those
boomer properties start flooding the real estate market?
Stock Market Crisis
Along those same lines, what will become of our stock market when the
boomers are forced to sell off their 401K and IRA stocks and bonds to fund their
retirements? Again, the younger generation won't be there to buy.
What will become of stock prices?
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